ICE's purchase of TMC Bonds continues trend of muni data technology consolidation

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Intercontinental Exchange agreed to buy TMC Bonds for $685 million in cash, the latest in a string of mergers and acquisitions in the municipal fixed income data and fintech space.

Upon closing, expected later this year, TMC Bonds will integrate its electronic fixed income market with ICE’s fixed income trading and data business, offering clients access to improved workflow capabilities.

“TMC Bonds will offer a new and complementary access point to liquidity for our customers and expand our portfolio of diverse solutions in the global fixed income markets across analytics, execution and post-trade,” ICE President Benjamin Jackson said in a press release Tuesday. “As the fixed income markets continue to automate and migrate to electronic trading, ICE’s trading and data infrastructure offer customers more choices to access liquidity, conduct price discovery and manage risk in more efficient ways.”

The rate at which transactions are taking place in the municipal fixed income data and fintech space is "staggering," said Stephen Winterstein, managing director of research and chief strategist at Wilmington Trust Investment Advisors. The deal comes eight days after IHS Markit's $1.86 billion deal to meld its customer service business with Ipreo's data and analytics capabilities.

“ICE continues to make acquisitions at breakneck speed, and the purchase of TMC should integrate nicely with their core businesses,” Winterstein said. “It will be interesting to see if and how they make adjustments to the existing TMC format to assimilate it into an exchange-like platform.”

The latest deal should come as no surprise, Winterstein said.

“There are several powerhouses that have clearly established themselves as leaders in the plumbing of our industry, and ICE is certainly one of them,” he said.

“By leveraging both ICE’s expansive reach and breadth of data and analytics, TMC’s clients will have access to workflow solutions far superior to what’s currently available in the market,” said Thomas Vales, TMC’s chief executive officer.

Winterstein said mergers and acquisitions have momentum, and he believes we could see similar transactions over the next 12-18 months, albeit perhaps in different areas of the industry.

“Pertaining to these and comparable types of deals, I wouldn’t be at all surprised to see several already familiar names in headlines over the balance of 2018 and into 2019,” he said.

“I believe any major combination like the ones we’ve seen over the past 36 months paves the way for smaller, creative, and nimble companies to fill the vacuum for data and service needs," Winterstein said. "As fast as these transactions take place, new enterprises are quickly filling that space. This is, perhaps, the most exciting and inventive time I can remember in the municipal bond market.”

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